Thailand eyes foreign-backed oil reserves and data centre power rules

Energy Minister Akanat Promphan has floated a plan to attract Middle Eastern oil producers to invest in a strategic petroleum reserve (SPR) in Thailand, positioning the country as a regional oil distribution hub while strengthening long-term energy security.

He also said the government was preparing conditions for data centre investors, whose operations consume huge amounts of electricity, to take greater responsibility for the power system. One option would be to require them to buy electricity at a rate above actual cost, with the margin used to help reduce power bills for households and existing industries.

Data centre operators would also be expected to contribute to investment in Thailand’s smart grid and clean-power infrastructure, he said.

Akanat made the remarks during a special address at the roundtable discussion “The Big Issue Energy Crisis New Solutions”, hosted by Thansettakij on Monday (May 18).

New PDP must be faster and more flexible

Akanat said global energy crises and geopolitical tensions, including conflict in the Middle East and the Russia-Ukraine war, should be seen as an opportunity for Thailand to restructure its energy system and update regulations to improve national competitiveness.

He stressed the need for a new Power Development Plan (PDP) that is flexible and responsive enough to handle unexpected shocks, from climate change to geopolitical disruptions that could affect the economy and people’s livelihoods.

“The current PDP has been in use since 2018, which means it is outdated and no longer keeps up with changing circumstances,” he said. “The new PDP must be issued as quickly as possible. Even if there are some flaws, we must move ahead so it can serve as the main framework and then be adjusted later to reflect changing conditions.”

Thailand seeks strategic oil reserve

Akanat said one of the most urgent issues was energy security. During recent crises, Thailand had at times come close to running short of oil because of problems in the Strait of Hormuz, which affected crude oil supplies. Thailand imports more than 90% of its crude oil.

To ensure sufficient fuel at reasonable prices over the long term, he said Thailand must develop an SPR. The country should not rely only on legally required reserves held by the private sector, he said, adding that the state should also play a role in national oil reserves.

One possible approach would be to invite Middle Eastern oil producers to use Thailand as a storage destination for oil reserves that could later be distributed across the region. This would reduce risks while improving energy security, he said.

“There is a lot of oil in the Middle East, and they are concerned they may not be able to sell it, which would affect their economies and future livelihoods,” Akanat said.

“Bringing oil to store in our region may be possible, and Thailand could be attractive because we are a peaceful country and strategically well placed. They would invest in the reserves, and we would also be able to use them. This requires careful talks and negotiations.”

He added that the ministry was also preparing to review the oil pricing mechanism, which refers to the Singapore market, as well as the use of a windfall tax mechanism to collect excess benefits from refineries during crises. The proceeds could be used to ease the burden on motorists and create a better balance in the system.

At the same time, Thailand would continue promoting biofuels, including ethanol and biodiesel, to reduce imports and support Thai farmers.

Smart grid upgrade to support clean power

On electricity, Akanat said Thailand would push ahead with electrification and the transition to clean energy. A key priority is grid modernisation, including upgrades to transmission and distribution networks to create a smart grid capable of supporting renewable energy.

He said investment would focus on an infrastructure fund and would not use money from the 400-billion-baht borrowing decree.

“Although people are excited about the 400-billion-baht borrowing decree, Thailand has in fact been borrowing 700-800 billion baht a year to compensate for budget deficits for more than 20 years,” he said.

“The government has an idea to use part of the borrowing to support solar power for households through cashback or direct subsidies, helping people reduce the cost of installing solar panels and batteries. This money must go directly to the people, without passing through anyone else’s hands, for transparency.”

The key household solar measures include cutting the approval process from more than a year to no more than one month, or possibly as little as seven days, through a one-stop service system.

The government will also discuss low-interest loan packages with banks for solar panel and battery installations, including energy storage systems (ESS). Direct cashback subsidies for households may also be introduced.

On electricity buyback prices, the government plans to maintain the rate at 2.20 baht per unit and expand the purchase quota from 90 megawatts to 500 megawatts. Once the quota is full, it would be expanded in additional 500-megawatt phases.

The ministry will also unlock third-party access, allowing private operators to use power authorities’ transmission networks to deliver clean electricity to one another by paying a wheeling charge.

Data centres must share system costs

Akanat said data centre investment had raised questions about whether Thailand would receive sufficient benefits compared with the resources used, including land, electricity and water.

He said conditions would be set requiring data centres to help shoulder the burden and take responsibility for the system. One possible measure is to require them to buy electricity at a higher rate that reflects the real cost of imported LNG, with the difference used to help reduce electricity costs for households and existing industries.

Data centres would also have to help invest in the country’s smart grid and clean-power network, he said.

“The wave of data centre investment coming into Thailand must be managed carefully,” Akanat said.

“Although it is an opportunity for the digital economy, data centres consume enormous amounts of electricity and water. Conditions may therefore be set for investment promotion and electricity use, requiring data centres to take responsibility for the system, such as helping invest in the smart grid or agreeing to buy electricity at a rate that reflects higher real costs, so the difference can help ease electricity bills for the public and Thailand’s existing industries.”

Domestic gas and water management in focus

Akanat said Thailand also needed to accelerate exploration and production of domestic natural gas in the Gulf of Thailand, the Andaman Sea and the Thailand-Cambodia overlapping claims area.

If domestic gas could rise from 60% to 100% of supply, Thailand would reduce reliance on imported LNG, which is more volatile and more than twice as expensive as domestic gas. This would help bring electricity prices down in a more systematic way, he said.

He also said Thailand had sufficient water but lacked efficient management, leading to flooding during the rainy season and shortages in the dry season. This has created competition for water among households, agriculture and industry, especially with the arrival of new industries such as data centres, which require large volumes of both electricity and water.

The priority, he said, was to ensure that farmers and industry have enough water to increase productivity and support economic growth.

Akanat added that infrastructure investment in the Eastern Economic Corridor over the past 20 years had faced limits involving land and public land management. A key problem concerns waterways and public land in industrial areas, where exchanges or management changes to improve land use can take a very long time, sometimes up to 10 years.

High land prices in the EEC have also become an obstacle to installing solar panels for industrial operators in the area.

“The country’s problem is not that we do not know what to do,” Akanat said. “The problem is that we know and we talk about it, but we do not act. I confirm that we will accelerate all the issues mentioned and deliver results within no more than one year, to build an energy structure that is truly secure and fair for the people.”